The Committee for a Responsible Federal Budget (CRFB) has long championed a myopic version of federal fiscal policy where the overriding goal is to cut the deficit, ideally by slashing social programs and hiking taxes on the middle class. Their president Maya MacGuineas’s response to President Biden’s budget proposal for fiscal year 2025 is no different. (Fiscal years start in October, which is why the proposal is coming now.)
Despite many sweeping reforms that would seriously improve the lives of most Americans—or perhaps because of them—the CRFB hates the Biden budget. Instead, they call on the president to consider cutting Social Security, and criticize tax hikes only being levied on the wealthy. It’s of a piece with the organization’s history.
Let’s start with the details. The proposal boosts revenues and improves tax fairness through measures like raising the corporate tax rate to 28 percent (up from 21 percent), creating an alternative minimum tax rate (AMT) of 24 percent (up from 15 percent) for billion-dollar businesses, increasing the tax on stock buybacks to 4 percent (up from 1 percent), establishing an AMT for billionaires of 25 percent, and taxing investment income at the standard tax rates rather than the lower capital gains rate for families earning over a million dollars a year.
Simultaneously, it includes key welfare policies like permanently expanding the Child Tax Credit (CTC), the Earned Income Tax Credit (EITC), and the Affordable Care Act premium tax credits. It also creates a national requirement for paid family and medical leave, invests in low-cost preschool and child care, expands nutrition assistance for pregnant mothers and new mothers with babies or young children (WIC), and shores up Medicare. On top of all of that, the proposal also includes $3.3 trillion in deficit reduction. In short, it’s a package of tax hikes focused almost entirely on the rich, coupled to an expansion of benefits for everyone else, plus a big cut in borrowing.
To be sure, the proposal has its warts. It still allocates nearly $900 billion to military spending, despite the fact that the Pentagon cannot pass an internal audit to save its life. It also increases spending for border control, which could be problematic given the brutality of Biden’s border policy. Additionally, as CRFB is very eager to harp on, there is not a concrete plan to ensure the long term stability of Social Security. That said, the good far outweighs the bad.
Given CRFB’s stated goal is to advance policy “proposals to improve the country’s fiscal and economic condition,” they should love Biden’s budget proposal. Lower deficits, securing Medicare, paying for all new spending provisions, expanding investment in clean energy, and reducing child poverty. All things that stabilize the budget and/or benefit long-term economic growth, all while pushing back on economic inequality. And yet, CRFB’s response has been decidedly muted, barely mentioning the highlights and continually criticizing the proposal.
Reading CRFB’s reaction to the budget proposal, it is difficult not to notice that every time the statement says something grudgingly positive, there is an immediate “but” right on its tail. For instance (all emphases added):
- “The President’s call for over $3 trillion of deficit reduction is a welcome start, and he deserves credit for presenting a budget that pays for new initiatives and improves our fiscal situation; but the budget doesn’t go nearly far enough.”
- “There are many helpful proposals in the budget that could reduce projected deficits, including ideas to close various tax loopholes, lower prescription drug costs, and raise significant amounts of new revenue. But at the same time, it turns around and spends much of this money, eating into the overall savings.”
- “The President deserves kudos for paying for his new initiatives. Agreeing that new policies should not add one penny to the debt is a critical first start in addressing our debt situation. Given our dismal fiscal situation, though, we really shouldn’t be passing big new spending programs and tax cuts until we have a plan to fix the debt and responsibly address any policy extensions.”
- “Calling for new revenue to secure Medicare is important, but we also need a plan to hold down health care costs and to restore Social Security solvency before its trust fund runs out in less than a decade.”
- “This budget is an important step in the right direction, but it’s still too little.”
There are two things worth noting here. First, the hostility toward spending as such, regardless of what it is for. The CRFB claims to be in favor of improving America’s “economic condition,” and many of Biden’s ideas certainly would pay for themselves several times over. A study of free pre-K in Oklahoma, for instance, found its benefits outweigh its costs by 2.65 to 1. Yet this possibility is never explored or even mentioned. Second, the redundancy of the buts—in every case the criticism amounts to “spending bad.” The lack of specific criticisms of concrete proposals—and no mention whatsoever of Biden’s push to increase military spending—leaves the strong impression that the CRFB simply opposes social spending in general.
All this gets to the heart of the issue with CRFB: They are not honest about their true priorities.
Compare its sniffy critique of Biden’s budget to how it reacted to massive tax cuts for the rich. In a piece last year about extending the Tax Cuts and Jobs Act (TCJA), better known as the Trump tax cuts, CRFB calls for policymakers to “carefully consider which provisions are worth extending, which should be modified, and which should be allowed to expire.” Though the article does admit extending the cuts would be “costly,” suddenly now we should be studying each provision carefully!
In fact, the Biden budget actually does extend and adapt some of the Trump tax cuts, which expire in 2025, in the way CRFB suggests. Lawmakers “should view 2025 as an opportunity to re-evaluate what worked and what did not and to consider further tax reforms. Lawmakers should not extend any parts of the TCJA without enough offsets to ensure they reduce—or at least don’t add to—the national debt,” they write.
This is precisely what Biden did, and yet he got no credit for it. The president has called for extending some Trump cuts, mostly those that benefit people earning less than $400,000 annually, but also called for offsetting those.
Glenn Kessler from The Washington Post estimated that Biden’s proposed extensions would cost upwards of $1.7 trillion. For their part, CRFB estimates that expanding every single provision of the TCJA would cost $3.4 trillion, but that’s an overestimate since Biden doesn’t want to extend every part of it; in particular, Democrats would likely try to extend without making the pass-through income deduction and suspension of the personal alternative minimum tax provisions permanent, or at least scaling them down significantly. By CRFB’s scoring, that could reduce the overall cost by up to $1.6-$1.7 trillion, though it would probably be less than that. Regardless, even a fairly small amount of wiggle room will keep it covered by the $3.3 trillion currently allocated for deficit reduction.
Indeed, even when chiding Biden for not naming specific offsets and whining about not enough deficit reduction, MacGuineas confirms that the leftover revenue in the proposal meant for tackling deficits could absorb the cost of TCJ extensions.
It’s unclear why the bar for a hypothetical next administration is just “not extend[ing] any parts of the TCJA without enough offsets to ensure they reduce—or at least don’t add to—the national debt,” while for Biden’s specific proposal, the expectation seems to be only extending if the entire deficit can be handled in one fell swoop, along with stabilizing Medicare and Social Security. If you compare CRFB’s coverage of Trump’s budget proposals, the disappointment expressed with the president’s plan is even more incongruous. To be fair, they consistently called out Trump’s accounting gimmicks, but they also praise his budget objectives and are sure to credit him every year with some variation of “smart, thoughtful policy proposals.” That may sound muted, but CRFB has not once described any part of any of Biden’s budget proposals as “smart” or “thoughtful” in any of its coverage of them.
Here are some things CRFB said about Trump’s budget proposals:
- 2018: “Encouragingly, the President’s budget sets a fiscal goal (balancing the budget by 2027) that puts the debt on a sustainable downward path, and he identifies a number of real and serious spending cuts to help meet that goal.”
- 2019: “We are encouraged that the President’s budget includes significant deficit reduction, in particular Medicare reforms and other smart policy changes.”
- 2020: “We support the President’s goal of reducing debt relative to GDP and are pleased he offers a reasonable timeframe for eventual balance. We also welcome the budget’s thoughtful proposals to slow health care cost growth and reform various spending programs.”
- 2021: “We are pleased the President has put forward this fiscal goal and are encouraged by many of the thoughtful policies proposed in his budget.”
For those who may have forgotten, Trump’s budgets were a dog’s breakfast of incompetence and dishonesty. As a matter of course, they relied on fantastical assumptions, gamed the budget window, assumed enormous savings from repealing Obamacare without a plan to replace it, and on and on. And CRFB knows this! They pointed it out constantly. So why were Trump’s budgets replete with smart and thoughtful ideas? Well, in three of the four above quotes they are praising his proposed cuts to social programs.
In fact, in the same statement where CRFB’s director criticized Biden for not securing funding to protect Social Security, she also critiqued him for his “refusal to touch Social Security.” Indeed, she said that not being open to touching (read: cutting) the program and raising taxes on those earning less than $400,000 was tantamount to “asking a doctor to perform a surgery with one hand tied behind his back.”
This is not the first time that the White House has been blasted by budget hawks for not “touching” Social Security. At the start of the year, the CRFB published an infographic suggesting that President Biden supported letting Social Security reach insolvency, rationalizing it by saying that “commitments not to touch Social Security are akin to endorsing a 23 percent across-the-board benefit cut.” This is tantamount to saying “unless we cut Social Security, there will be cuts to Social Security.” One tends to suspect they’re looking for any excuse to impose cuts.
Conversely, the CRFB insists that it’s a myth that we can tax the wealthy to make Social Security solvent, while at the same time their own tool shows that merely subjecting all wages to the payroll tax—income over $168,000 is not subject to the payroll tax, meaning the more you make the less you pay—would extend the program’s solvency by nearly a quarter-century. What’s more, given that Biden’s proposal stresses moving to tax investment income more like wages, that could be a significant underestimate given it does not account for what would happen if capital gains were subject to payroll taxes. So are we worried about Social Security’s stability or not?
One point that CRFB is right about is that a budget proposal is “a statement of values and priorities.” Unfortunately, principles like keeping people from dying of lead poisoning and funding to end gender-based violence don’t make the cut in terms of priorities for them. Nothing illustrates the point as clearly as their Debt Fixer tool, which gives users a list of policies to adjust and shows the impact on debt and deficit projections. For every policy, there is an indicator showing whether it will increase or decrease the debt and deficit. But guess what is nowhere to be found: any non-budget costs. No estimate of the number of people who could lose medical coverage or the risks of continued pollution if the clean-energy tax credits from the Inflation Reduction Act are repealed.
Additionally, there is no accounting of how additional funding for federal regulators can actually bring in more revenue in secondary actions (things like fines, assessment fees, etc.) than they cost to administer or expand. (In fairness, the Congressional Budget Office excludes them as well because of a statutory restriction on including secondary budget effects.) The most well-known example is the IRS, where for every $100 million cut from their budget, the Treasury loses $600 million in revenue from an inability to go after tax cheats. There are many other examples as well though, from the Securities and Exchange Commission to the Department of Justice’s Antitrust Division, which could fund itself for over a decade off of fines collected in just 2017. All of these agencies are scored as costing money, even though that is untrue.
A truly responsible budget takes a holistic view of the American people. CRFB can claim to be staying neutral by focusing just on the accounting, but what they really are is consistently biased against social spending while distinctly soft on tax cuts for the rich. It’s easy, though contestable, to say in a vacuum that $6 trillion in deficit reduction is better than $3 trillion. It’s harder to say that $3 trillion toward deficit reduction plus $3 trillion in investment in the American people is worse than $6 trillion in reductions. That would require the kind of actually serious budget analysis in which the CRFB has been consistently uninterested.
Image Credit: “Maya MacGuineas” by New America is licensed under CC BY 2.0.